Novartis understands sustainability and is refreshingly open about the challenges. But it needs to cut to the chase and show more clearly how it is making a difference
Novartis is one of the world’s leading pharmaceutical companies, with 123,000 employees, products in more than 180 countries and a reach of 1 billion patients globally. As a leader in pharma, Novartis is known for strong performance in the Access to Medicine Index (ranked fourth in 2014), based on a forward-looking access to healthcare strategy and a strong pipeline of innovative medicines in key therapeutic areas. Novartis often appears in leading sustainable rankings, such as the annual Global 100 most sustainable corporations in the world and RobecoSam’s sustainability yearbook.
Novartis has many positive stories to tell. The Novartis mission, of providing access to healthcare, is clear. From the creation of “Novartis Access”, a portfolio of 15 medicines to treat chronic diseases such as cancer and diabetes for public-sector healthcare providers at a cost of $1 per treatment per month, to the Novartis Malaria Initiative which has distributed 300m antimalarial doses to children since 2009, Novartis has a host of stories showing that the company is clearly making healthcare more accessible to many.
Clarifying the precise impact of these initiatives is not easy, Novartis admits in the 2015 report. “Our medicines and medical devices help to reduce these [healthcare] costs, but quantifying these indirect savings is difficult,” the report says. Novartis does a good job of quantifying the reach of many initiatives – for example, since 2010, 23.6 million people in rural India, Kenya, Vietnam and Indonesia have attended 591,736 health awareness meetings. However, a little additional effort in defining the actual impact of these awareness meetings using a simple methodology would be a powerful metric for Novartis to develop.
Sharing the challenges
Novartis sets a credible tone in this report with the disclosure of challenges. The opening remarks by the CEO, Joseph Jimenez, include the comment: “We continued in 2015 to reinforce our culture of integrity, even as we felt the ongoing effects of pockets of bad behaviour from the past.” This is an admission of the legacy of unethical payments to healthcare professionals and manipulation of clinical trial results that has plagued pharma companies in recent years. It is good to see that this is not being swept under the carpet. And the suspension of Novartis’s business in Japan due to compliance issues is openly addressed.
Materiality in focus
Novartis’s refreshed materiality analysis identifies nine “key material” topics and a further 16 “material” topics. All appear to be addressed in equal measure in this detailed report - they are all noted in all the aspects and indicators reported. However, it is impossible to track a key material topic through the report to the performance indicators that measure progress.
For example, the number one issue is “lower-income patients”. Novartis associates this with access to healthcare. Although there is a good discussion of access in this report, and three-year data on number of patients reached via patient assistance, it is not clear whether this is dedicated to those on lower incomes and what measure of assistance it affords them. I would like to see greater clarity on the direct connection between material issues and relevant performance metrics. Novartis publishes a set of largely quantifiable multi-year targets and 2015 performance against targets on the website, but these use a different language and format from the materiality assessment so the connection is not immediately obvious. It’s time for Novartis to combine these two processes.
Meticulous and transparent – too much?
The report opens with an interesting overview of Novartis’s two broad corporate responsibility strategy channels: increasing access to healthcare and doing business responsibly. The Novartis approach clearly relates to corporate responsibility as part of the business and through the business. This is not just a “saving energy and developing employees” sort of report. Novartis first explores the company’s role in society; the ways it is working towards improving healthcare for lower-income patients; eradicating diseases such as malaria and leprosy; research into tropical diseases and more. Then, “doing business responsibly” places renewed focus on governance and ethics, supported by other environmental and employee-related areas of progress.
This first section is followed by a GRI G4 Index-based disclosure-by-disclosure, indicator-by-indicator report covering every aspect of Novartis’s performance in the order of the G4 standard. As this is a G4 comprehensive option report, this means all 58 general disclosures and 91 specific disclosures.
Reporting everything about everything does not do justice to the spirit of the G4 framework or to Novartis’s own sustainability story and impacts. This approach demonstrates meticulous adherence to the GRI standard, and a commitment to above-average transparency, but it makes for a rather long and tedious disclosure. For example, biodiversity is not stated as material, but Novartis discloses against all biodiversity indicators. I would recommend relegating non-material topics to the Novartis website.